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II. Credit Card Crash Course 101

What is a Credit Card and How is it Different From a Charge Card or Debit Card?

Credit Card

Credit cards represent a line of credit – an account with money that you can borrow repeatedly. Your account will be assigned a certain limit based on the information you provide in your application. After approval, you can swipe your card to make purchases.

Debit Cards

A debit card functions the same way as a credit card while shopping; however, your debit card is linked directly to your bank account. Therefore, the amount of your purchase is deducted from your checking account or some other designated account. It’s useful to think of a debit card as a paperless check that clears immediately.

Charge Cards

Charge cards and credit cards are very similar, with one major difference. A credit card is a revolving credit line in which you are only required to pay a minimum payment, or a percentage of your total bill each month. Charge cards require you to pay the entire balance in full each month or be charged a hefty penalty. According to Kiplinger.com, travel and entertainment cards, such as some American Express cards and Diners Club, are charge cards, not credit cards. Consumers may be able to obtain a larger credit line with a charge card, however they are not as widely accepted as traditional credit cards. Charge cards and credit cards offer services such as annual accounting of charges, traveler’s checks, and cash in an emergency.

Whichever route you take, any form of plastic is safer to carry than cash. If someone steals your wallet or purse that’s full of cash, there’s no way to retrieve it unless the thieves are caught. When you use debit and credit cards, however, the bank will cover those unauthorized charges up to a certain amount, usually $50, so you don’t lose every dime to your name.

How Do You Apply for a Credit Card?

Applying for a credit card is surprisingly simple, especially if you don’t have to pay an application fee. All you have to do is fill out a form and wait to be approved. You must be 18 or older to apply for any type of credit card, and you must have a job. This shows that you will have the income to pay for purchases you make with the card. You can either complete an online application, send an application through the mail, or fill out an application in a store, depending on the card you’re applying for. Online applications can be approved in seconds, depending on your creditworthiness, but mail-in applications may not be approved for 7-10 business days.

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*Advertiser Disclosure:CompareCards is an independent, advertising-supported credit comparison service. Offers which appear on CompareCards.com are from companies with which CompareCards.com receives compensation. This compensation may impact the location and order in which these products appear. CompareCards.com takes into consideration several proprietary rules and the likelihood of an applicants’ credit approval to determine how and where products appear on the site. CompareCards.com does not include the entire universe of available credit or financial offers.

ADVERTISER DISCLOSURE

CompareCards is an independent, advertising-supported credit comparison service. Offers which appear on CompareCards.com are from companies with which CompareCards.com receives compensation. This compensation may impact the location and order in which these products appear. CompareCards.com takes into consideration several proprietary rules and the likelihood of an applicants’ credit approval to determine how and where products appear on the site. CompareCards.com does not include the entire universe of available credit or financial offers.

About Our Ratings

Our editors rate credit cards objectively based on the features the credit card offers consumers, the fees and interest rates, and how a credit card compares with other cards in its category. The ratings are the expert opinion of our editors, and not influenced by any remuneration this site receives from card issuers.

Excellent Credit

700 or Higher

Credit cards for excellent credit are intended for those with a credit score of 700 or Higher.

Good Credit

700 or Higher

Credit cards for excellent credit are intended for those with a credit score of 700 or Higher.

Fair Credit

Between 600 - 659

Credit cards for fair credit are intended for those with a credit score between 600 - 659.

Bad Credit

599 or Lower

Credit cards for bad credit are intended for those with a credit score of 599 or Lower.

No/Limited Credit

- - -

Credit cards for no credit are intended for those without an established credit score.